Australian east coast looks promising for oil and gas

Aug 22, 2004 02:00 AM

The search for new energy sources steps up big-time in September when explorers probe oil and gas prospects on the
North Island's east coast with the potential to rival Taranaki. Australian oil company Tap Oil will drill an
exploration well 21 km out from Akitio on the Wairarapa coast.
Petroleum scientists say the Tawatawa Prospect is the "most exciting" of a chain of 19 "extremely promising"
prospects. David Darby of the Institute of Geological and Nuclear Sciences said the area had all the components for
some hugely significant gas reserves.
"It has the rocks, the structures and the hydrocarbon shows -- what we lack is specific information on just what is
in fact there," he said. "But in a few weeks we will hopefully have some answers."

Darby said the coast's potential had long been recognised. But offshore and onshore Taranaki fields had sucked up
exploration resources since the mid-1970s with the discovery of the Maui field. Darby said drilling on the east coast
was expensive becausethere were many unknowns, and risks were high.
"But with Maui near the end of its life, the market dynamics have changed, and the Tawatawa drill has the potential
to open up a whole new area of energy source," he said.

The 25,680-ton rig Ocean Patriot, now anchored near Napier, will be towed to the drill site north-east of Castlepoint
and sink a speculative well to around 1,500 metres. Tap Oil New Zealand manager Clyde Bennett said drilling would
probably begin in the first week of September, and be completed within a fortnight. He said there were indications a
potential gas field off the Wairarapa coast could be as big as Maui.
The prospect extended over an area of 40 sq km, with a possible 1 tcf of gas. Oil was also a possibility, given the
presence of onshore oil seeps nearby.
"But until we drill, we really don't know," said Bennett. Darby said while the east coast prospects were as exciting
as Taranaki, they were the result of different geological structures.

Hydrocarbons in Taranaki came from coal deposits, but on the east coast interest centred on Waipawa black shale rocks
which became marine life graveyards. Darby said such geological structures had contained big gas reserves elsewhere.
While Tap Oil is responsible for drilling Tawatawa-1, costs of around $ 15 mm are being shared with Westech, the New
Zealand operation of Denver-based Energy, which has held exploration rights for the area since the mid-90s.
Tap Oil, which has farmed out 15 % of its half stake in the venture to private Australian company Claire Energy, has
been listed on the Australian Stock Exchange since 1996.

Tap Oil is Perth-based, and is one of several overseas oil explorers which have come to New Zealand as the search
surges up for energy alternatives to Maui. It won permits for exploration in Taranaki and Canterbury 12 months ago,
and joined up with Westech in June to drill on the east coast.
While the Taranaki Basin has around 600 wells, the East Coast basin has two, both drilled many years ago and tothe
north-west and south of Tawatawa. Both found gas, but not in commercial quantities. If Tawatawa -- or its successors
-- is successful, then Tap Oil says onshore gas pipelines from Taranaki, running through Manawatu to Hastings and
Napier, could connect the discovery to gas markets throughout the North Island.

Energy industry sources said another possibility was for Genesis or Contact Energy to build a gas-fired power station
near Castlepoint and transmit electricity instead, which would be cheaper. Petroleum Exploration Association of New
Zealand CEO Mike Patrick said the money being spent on the exploration showed Tap Oil and Westech were serious about
potential prospects.
Drilling begins at the Kiwi-1 well in offshore Taranaki, the fourth in a quartet of speculative drills that is
raising hopes of a significant new oil and gas find. Kiwi-1 is less than 10 km from the Pateke-2 well, where a 13 mm
column of oil was found earlier. Two previous nearby wells (Tui-1 and Amokura-1) have also hit encouraging signs of
hydrocarbons.

NZ Oil and Gas exploration manager Eric Matthews said another successful drill at Kiwi-1 would confirm what he'd long
believed. That is, significant quantities of oil have migrated west of the Maui field, and represent a new and
significant source of oil -- and possible gas -- to meet our energy needs.
Matthews said while the Amokura and Pateke wells had probably drilled into the same pool of oil, Kiwi was in a
different structure again.